In Cluck v. GEO Secure Services, LLC, the California Court of Appeal affirmed a trial court’s refusal to enforce an arbitration agreement between an employer and employee because the agreement, when considered together with a separate confidentiality agreement signed during the same onboarding process, created an unfairly one-sided system for resolving employment disputes.
In 2022, GEO Secure Services, LLC, (“GEO”) a private company that operates federal detention facilities and prisons on behalf of various government agencies, hired Jeffrey Cluck to work at its El Centro detention facility. As part of GEO’s standard onboarding process, Cluck signed an arbitration agreement requiring disputes arising out of his employment to be resolved through binding arbitration. The agreement stated that arbitration was not a mandatory condition of employment and gave employees 30 days to opt out. To do so, however, an employee had to wait to be assigned an employee identification number, prepare a signed and dated statement, and then send it to GEO’s legal department by mail or fax.
On the same day, as part of the same onboarding process, Cluck signed a separate confidentiality agreement addressing matters such as confidential information, intellectual property, competition, and solicitation of GEO employees. Unlike the arbitration agreement, the confidentiality agreement provided that disputes arising from that agreement would be litigated in court in Florida, including claims that would likely be pursued by GEO against an employee. It also gave GEO the right to seek remedies such as injunctions if an employee breached or threatened to breach the agreement.
After Cluck later joined a proposed class action alleging wage-and-hour violations, GEO sought to compel his claims to arbitration. The trial court refused, finding the arbitration agreement unfair/unconscionable and therefore unenforceable. GEO appealed.
The Court of Appeal agreed that the arbitration agreement could not be enforced, although its reasoning differed from the trial court’s. First, the Court found procedural unfairness in how the arbitration agreement was presented. Although employees technically had the right to opt out, the process for doing so was not evident. The agreement was presented as a standard document to new employees during onboarding. It contained a single signature line for an employee to indicate agreement, rather than stating the signature was optional or including a check box allowing employees to simply opt out. An employee who wanted to opt out had to wait for an employee identification number to be assigned, prepare a separate statement, and then mail or fax it to Florida within the first 30 days of employment. The Court concluded that this process did not provide employees with a sufficiently simple and realistic choice to decline arbitration.
More importantly, the Court held that the arbitration and confidentiality agreements had to be considered together, rather than evaluating the arbitration agreement by itself. Both agreements involved the same parties, were signed on the same day as part of Cluck’s hiring, and addressed how disputes arising from the employment relationship would be resolved. The fact that the confidentiality agreement focused more specifically on confidential information, intellectual property, and competition did not make it unrelated to the broader dispute-resolution arrangement between GEO and its employees.
Reading the agreements together revealed the central problem. The arbitration agreement broadly required arbitration of the types of claims an employee would most likely bring against the employer, including claims involving compensation, overtime, rest periods, discrimination, and harassment. The confidentiality agreement, however, permitted disputes involving confidentiality, competition, solicitation, and similar obligations, the types of claims GEO would be more likely to bring against an employee, to be litigated in court. As a result, the overall arrangement effectively required Cluck to arbitrate his most likely claims against GEO while allowing GEO to take its most likely claims against him to court. The Court found this lack of mutuality unfair and substantively unconscionable.
The Court also noted additional terms that favored GEO. Claims under the confidentiality agreement had to be litigated in Florida, where GEO was incorporated but far from where Cluck lived and worked; the agreement waived a jury; and it required Cluck to agree in advance that a breach would cause GEO irreparable harm and entitle GEO to seek injunctive and other relief. Taken together, the Court concluded that the agreements imposed substantially greater burdens on Cluck than on GEO.
Finally, the Court declined to simply remove the problematic provisions and enforce what remained. The unfairness went to the heart of the parties’ overall dispute-resolution arrangement: employees were directed toward arbitration for their claims while GEO preserved a preferred court forum for the claims it was most likely to pursue. Under those circumstances, the Court concluded that severing individual provisions would not be appropriate and affirmed the order denying GEO’s motion to compel arbitration.
Cluck v. GEO Secure Services, LLC (Aug. 3, 2026, D087341) ___ Cal.App.5th ___(certified for partial publication).
Note: Schools should ensure that their arbitration agreements, and any related agreements employees sign during the hiring process, are fair and mutual. Schools should be cautious of provisions that require employees to arbitrate the claims they are most likely to bring while allowing the school to pursue its own likely claims in court. Courts may consider these agreements together when deciding whether the overall arrangement unfairly favors the employer. Schools should also avoid opt-out procedures or other requirements that make it unnecessarily difficult or burdensome for employees to exercise their rights. Reviewing onboarding documents as a whole can help identify inconsistent or one-sided terms that could ultimately make an arbitration agreement unenforceable.